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Barker Company Paid Cash to Purchase Two Identical Inventory Items

Question 14

Multiple Choice

Barker Company paid cash to purchase two identical inventory items.The first purchase cost $18.00 cash and the second cost $20.00 cash.Barker sold one inventory item for $30.00 cash.Based on this information alone,without considering the effect of income taxes,which of the following statements is correct?


A) Cash flow from operating activities is $11.00 assuming the weighted-average inventory cost flow method is used.
B) Cash flow from operating activities is $12.00 assuming the FIFO inventory cost flow method is used.
C) Cash flow from operating activities is $10.00 assuming the LIFO inventory cost flow method is used.
D) The amount of cash flow from operating activities is not affected by the inventory cost flow method chosen.

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